CGD Group Consolidated Operations – 31 March 2015

Summary of evolution in 1st quarter*

For comparability purposes, the amounts of net income and income before tax and non-controlling interests for 1st quarter 2014, were adjusted to reflect the current percentage equity stake in the insurance companies (15% in Fidelidade and 20% in Multicare and Cares) at the said date.

Results

CGD’s net interest income was up 15.5% over the same quarter 2014, benefiting from a decline of its funding cost, also higher than the reduction in income from lending operations.
Net operating income was up by a positive 2.8% over 1st quarter 2014 to €497 million for the period.
Gross operating income, at €175.7 million, was boosted by the international activity contribute, which represented 61.4% of the total in the 1st quarter 2015.
Provisions and impairment for the quarter were down 34.3% by €59 million to €112.9 in comparison to €171.9 million year-on-year, reflecting the gradual improvement of credit risk conditions in the markets in which CGD operates.
Income before tax and non-controlling interests was €65.4 million, representing growth of €47.6 million in comparison to 1st quarter 2014, with the exclusion of the results of the insurance companies, appropriated at the time of their disposal, to ensure comparability.
CGD’s consolidated net income attributed to shareholder for 1st quarter 2015 improved €1.9 million over the comparable amount registered last year to a negative €8.9 million, including the impact of the fiscal treatment of the loan impairment temporarily not deductible.

Balance Sheet

CGD’s consolidated balance sheet was down 10.5% by around €11,808 million in 1st quarter 2015, over the same quarter 2014, essentially on account of the sale of the insurance business – Fidelidade, Companhia de Seguros, S.A. (80% in May 2014 and an additional 5% in January 2015).
The loans and advances to customers portfolio, including loans with repo agreements, at €72,408 million (gross), was down 1.6% by €1,208 million over March 2014. Of this, €1,253 million are due to the net impact of mortgage loans in Portugal, that increased the new operations by 29.9% over March 2014, but still insufficient to offset portfolio repayments.
Reference should be made to the increase in the market share of loans and advances to companies for maturities of up to 1 year evidencing our backing of the Portuguese companies’ working capital financing (18.4% in February 2015).
There was a positive change of €3,509 million in customer resources in 1st quarter 2015 (up 5.3% in comparison to 1st quarter 2014), to €70,026 million.
The loans-to-deposits ratio of 95.9% reflected a negative commercial gap of €2,840 million which evidences the robustness of CGD’s retail resources-taking capacity, expressed by the €3,431 million increase in customer deposits.

Liquidity

CGD returned to the primary market in January 2015 with a €1 billion covered bonds issuance, with a maturity of 7 years and a coupon rate of 1% (a spread of 64 bps over the mid-swaps rate).
Translating its comfortable liquidity situation, CGD Group decreased its funding from the ECB last year by €3,278 million (47.8%) to €2,987 million at the end of March 2015.
In parallel and across the same period, CGD Group also reduced the amount of its assets eligible for the ECB pool by €3,120 million (20.8%) to €11,910 million in March 2015. The €8,923 million in assets available for the referred to pool at the end of 1st quarter 2015, compared favourably with the preceding year’s €8,702 million.
The liquidity coverage ratio (LCR) at the end of March, calculated under CRD IV / CRR rules, was 97.8% against the preceding year’s 99.3%. This was significantly higher than the minimum requirement of 60% from October 2015 on and very close to the 100% requirement for 2018.
The net stable funding ratio (NSFR) of 126.0% at the end of March, calculated in accordance with the same rules, in comparison to the preceding year’s 125.1%, also confirmed CGD Group’s comfortable liquidity situation.

Solvency

The common equity tier 1 (CET 1) ratios calculated in accordance with CRD IV / CRR phased-in and fully implemented rules, and considering the deferred tax assets special regime, totalled 10.9% and 10.3%, respectively, at 31 March 2015. The above ratios were 11.3% and 9.7% one year previously (March 2014). The current amounts reflect the improvement in CGD’s solvency levels.
The fully implemented leverage ratio of 6.0%, calculated under CRD IV / CRR rules, was also an improvement over the March 2014 ratio of 5%.

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(*) The amounts for March 2014 have been restated to reflect the application of IFRS 10 which led to the inclusion of IMOBCI in the consolidation perimeter by the full consolidation method; non-controlling interests in open-ended investment funds, included in the consolidation, were reclassified to other liabilities and other income from financial operations.

Caixadirecta

Caixadirecta

CGD Group Consolidated Operations – 31 March 2015

Summary of evolution in 1st quarter*

For comparability purposes, the amounts of net income and income before tax and non-controlling interests for 1st quarter 2014, were adjusted to reflect the current percentage equity stake in the insurance companies (15% in Fidelidade and 20% in Multicare and Cares) at the said date.